CTP CTP Cash Flow Management & Liquidity

Question 1

Which tool is most commonly used in turnaround situations to project short-term cash needs and identify liquidity gaps?

Accepted Answer

13-week cash flow forecast

Answer

The 13-week cash flow forecast is the standard tool in distressed situations to track near-term liquidity on a rolling weekly basis.

Question 2

A company's Days Sales Outstanding (DSO) has increased from 35 to 62 days. What is the primary cash impact?

Accepted Answer

Cash is tied up longer in receivables, reducing available liquidity

Answer

Rising DSO means the company waits longer to collect cash from customers, directly tightening available working capital.

Question 3

In a distressed company, which working capital lever typically yields the fastest cash improvement?

Accepted Answer

Accelerating accounts receivable collections

Answer

Accelerating collections reduces the receivables balance quickly, converting existing sales into usable cash without requiring new revenue.

Question 4

What does a negative cash conversion cycle indicate for a distressed business?

Accepted Answer

The company collects cash from customers before paying suppliers, a favorable liquidity position

Answer

A negative cash conversion cycle means the company funds operations with supplier credit rather than its own cash, which is a liquidity advantage.

Question 5

Which action is a CTP practitioner most likely to recommend to immediately preserve cash during a liquidity crisis?

Accepted Answer

Implementing a payment moratorium on non-critical vendor invoices

Answer

Temporarily deferring non-critical vendor payments conserves cash and buys time for the restructuring professional to develop a longer-term plan.

CTP - Certified Turnaround Professional Practice Test